TPP members vow to continue trade talks

Event

On March 14th‑15th representatives from countries comprising the Trans-Pacific Partnership (TPP) met in the Chilean city of Viña del Mar to discuss the future of the pact. The agreement was scuppered in January by the decision of the US president, Donald‑Trump, to withdraw the US from involvement.

Analysis

The two‑day conference was attended by representatives from the 11 remaining countries of the TPP (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam), as well as representatives from China, Colombia and South Korea. The US ambassador to Chile also attended the talks. The conference was the first between the constituent members since the US withdrawal.

After the talks, the representatives signed a declaration committing to continuing discussions to promote free trade and regional integration within the Asia-Pacific region. The declaration said that future trade talks would continue to rely on the "gold standard" established by the TPP framework, and that further discussions on continuing the TPP would take place at a meeting of the trade ministers of the Asia-Pacific Economic Cooperation (APEC) forum on May 20th‑21st in Vietnam.

The commitment to explore ways to ratify the TPP trade agreement is notable, as it showcases the willingness of TPP members to sustain the momentum of the trade talks despite the withdrawal of the US, the participation of which country was thought to be the main draw for many countries. Member countries have largely tackled this through bilateral deals. Australasian countries have turned their attention towards the Regional Comprehensive Economic Partnership (RCEP), a proposed free-trade agreement between the ten‑members of the Association of South-East Asian Nations (ASEAN) and six countries with which ASEAN has existing bilateral trade agreements (Japan, China, South Korea, India, New Zealand and Australia). In addition, the Pacific Alliance (a trade bloc consisting of Chile, Colombia, Mexico and Peru) has said that it would introduce "associate membership" for countries with which the bloc has especially strong ties.

China is supportive of bilateral and regional free-trade agreements. However, the lack of liberalisation in some sectors of China's economy, as well as the subsidies provided by the state to domestic companies, present a non-tariff barrier to trade, which may prove to be key stumbling blocks in future negotiations.

Impact on the forecast

The Economist Intelligence Unit views the talks as an encouraging signal, but we continue to believe that a TPP agreement remains unlikely without US involvement.